2003 (3) TMI 382 - AT - Central Excise

Summary

Issues Involved:
1. Classification of imported items: whether they fall under Chapter Heading 8439.99 or Chapter 3920.10.
2. Eligibility for the benefit of Notification No. 156/86-Cus. dated 1-3-1986.

Detailed Analysis:

1. Classification of Imported Items:
The primary issue revolves around the classification of the imported items described as "spares for paper machines, suction box top covers, strips and doctor blades" and "foils." The respondents claimed classification under Chapter Heading 8439.99, which pertains to "paper making machinery and components thereof," while the Revenue contended that the items should be classified under Chapter Heading 3920.10, which pertains to plastic films.

The Commissioner of Customs (Appeals) upheld the respondents' classification claim under Chapter Heading 8439.99, noting that the imported goods are not films but profiles made of polyethylene specifically designed for the paper industry. The confusion was attributed to the term "foils" used in trade, which led to a misinterpretation that the items were plastic films.

The Tribunal's majority agreed with the Commissioner, emphasizing that the items are not transmission or conveyor belts or belting of plastics, which are excluded from Chapter 84 under Section Note 1(a) of Section XVI. The items were found to be integral parts of paper-making machinery, used for dewatering pulp, and thus correctly classified under Chapter Heading 8439.99.

2. Eligibility for Notification No. 156/86-Cus.:
The secondary issue concerned the eligibility for the benefit of Notification No. 156/86-Cus., which provides partial exemption for "component parts of paper machinery." The Commissioner (Appeals) applied previous judgments (Jindal Strips Ltd. and Ferro Alloys Corporation Ltd.) to conclude that "components" include spare parts, thus making the imported items eligible for the notification's benefits.

The Tribunal's majority upheld this view, stating that the items are indeed components of paper-making machinery and thus entitled to the exemption under Notification No. 156/86-Cus. The Tribunal rejected the Revenue's argument that the items were merely plastic films or belting, reiterating that they are essential parts of the machinery designed for specific functions in the paper-making process.

Separate Judgments:
- Majority Judgment: The majority (S.L. Peeran and G.A. Brahma Deva) upheld the Commissioner's decision, confirming the classification under Chapter Heading 8439.99 and eligibility for the benefit of Notification No. 156/86-Cus.
- Dissenting Judgment: Jeet Ram Kait dissented, arguing that the items should be classified under Chapter 3920.10 as plastic films and not entitled to the notification's benefits, as they are not essential components of paper-making machinery.

Conclusion:
The Tribunal, by majority, upheld the classification of the imported items under Chapter Heading 8439.99 and confirmed their eligibility for the benefit of Notification No. 156/86-Cus. The appeal by the Revenue was rejected.